Facilitation activity for sale of goods by overseas supplier qualifies as intermediary – AAR West Bengal
by ReinHeads Team | Jul 8, 2021
AAR West Bengal* – Facilitation activity for sale of goods by overseas supplier qualifies as intermediary
Facts
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- Teretex Trading Private Limited (‘the Applicant’) is facilitating supply of goods by an overseas suppliers (located outside India) to overseas/ Indian buyers
- The Applicant is working as an independent facilitator/ mediator without being appointed as an agent of the overseas supplier or the buyer
- The Applicant procures purchase order for supply of goods from the buyers and then connects such prospective buyers with the overseas suppliers. The overseas supplier of goods thereafter despatches the goods directly to the buyers
- The Applicant receives consideration in the form of commission in foreign exchange from the overseas supplier
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Issue before the Authority for Advance Ruling, West Bengal (‘the AAR’) |
- Whether the Applicant’s activity of facilitating sale of goods by overseas supplier to prospective buyers qualify as ‘export of service’?
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Discussion and Findings of the AAR
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- The AAR held that the supply of facilitation service by the Applicant satisfies all the conditions to qualify as an ‘intermediary’ as defined under section 2(13) of the IGST Act 2017 on account of the following:
- The Applicant arranges the supply of goods between the overseas supplier and prospective buyers
- The Applicant can neither change the nature and value of supply of goods nor he holds the title of the goods
at any point of time during the entire transaction
- The Applicant undertakes the aforesaid business activities without assuming any obligation either on behalf of the supplier or on behalf of the recipient of the goods and thereby the Applicant doesn’t supply such goods on his own account
- Supply of services by the Applicant is inextricably linked with the supply of goods by the overseas supplier
- Section 13 of the IGST Act provides that the place of supply in case of intermediary services is location of the supplier. Accordingly, the place of supply shall be the location of the Applicant i.e., West Bengal
- Hence, the said supply of services will not be treated as export of services as place of supply in the given transaction is within India.
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*Advance Ruling Order No. 03/WBAAR/2021-22 dated 15 March 2021, (The Authority for Advance Ruling, West Bengal)